These are illegal ways of reducing one's tax burden. It entails tax payers, deliberately misinterpreting or canceling the true state of their affair to the tax authorities to reduce tax liability and includes in particular.
a) Engaging in illegal or adventurous activities where the incomes have not been disclosed for tax purpose
b) Rendering services where the income on service rendered will be received in kind and not in cash i.e. it is not recorded or disclosed
c) Related party transactions e.g. transfer pricing.
d) Preparation of fraudulent tax returns or dishonest tax reporting like under declaring and omission of taxable income, inflating deductible expenses or failure to submit or both.
Wilfykil answered the question on February 25, 2019 at 10:19
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Required:
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(b) The VAT you have computed in (a) above, was paid on 22 October 2001 since 20 October was on a Saturday. The VAT return was also submitted on the same day. How much additional tax would be payable, if any?
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(Where applicable, the transactions are exclusive of VAT at the standard rate).
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Required:
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1. The company's operating profit before tax amounted to sh. 2,000,000, excluding sh. 400,000 from investment activities
2. The company intends to distribute sh. 200,000 as dividend for the year ended 31 December 2004.
3. The corporate tax is 30%,
Required:
Compute the shortfall tax payable by Vuma Limited for the year ended 31 December 2004.
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Mr. A. Wakaba started a retail business on 1 January 2000. He has not been filling income tax returns for the six years to 31 December 2005.
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Zawadi Ltd is a Nakuru based company dealing in a variety of VAT designated goods. The following transactions were recorded for the month of September 2006:
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Mr. Dickson Maelfu is a-businessman with interests in the manufacturing sector. He is facing a back duty investigation by the revenue authority which suspects that he has been under - declaring income four years from year 2003 to year 2006.
You are the head of the team from the revenue authority conducting this investigation. Maelfu has submitted to you records of his private and business assets and liabilities from 1 January 2003 to 31 December 2006 as shown below.
Date posted: February 25, 2019. Answers (1)
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The following transactions...(Solved)
Mr. Elias Hodari is a businessman dealing in both vatable and non vatable goods. He is registered for value added tax (VAT) purposes.
The following transactions relate to his business during the month of April 2008:
7 April: Imported men's suits from Dubai (United Arab Emirate) for sh. 3,600,000.
9 April: Purchased motor vehicle spare parts from a local dealer for sh. 500,000.
10 April: Exported motor vehicle spare parts to Uganda and received sh. 800,000.
14 April: Sold ten bales of second hand clothes to retail traders at a local market for sh. 80,000 per. bale,
14 April: Purchased materials to construct a godown at Nairobi's Industrial area for sh. 960,000.
17 April: Paid the godown construction firm a deposit of sh 800,000 to commence the construction.
The contract price was agreed at sh. 1,800,000 with the balance being payable on completion of the" go- down construction.
21 April: Sold men's suits to a local trader for sh. 4,800,000.
22 April: Supplied motor vehicle spare parts worth sh. 600,000 to the Armed forces of Kenya.
25 April: Purchased women's clothes from a local fashion designer for sh. 1,200,000.
25 April: Supplied non-vatable goods to a VAT registered trader for.sh. 900,000.
26 April: Some of the men's suits imported from Dubai were found to be of poor quality and returned to the exporter in Dubai. A credit note of sh. 450,000 was issued by the exporter to Mr. Hodari.
30 April: The Company's hired godown was broken into and men's suits valued at sh. 720,000 were stolen.
Transactions are stated as VAT inclusive where applicable
The standard rate of VAT is 16%.
Required:
The VAT payable (or refundable) by Mr. Hodari for the month of April 2008 (ignore customs duty and restrictions on deductible input tax).
Date posted: February 25, 2019. Answers (1)